Key Takeaways
- Kristo Käärmann, the CEO of Wise, was fined £350,000 for being on HMRC’s “Name and Shame” list and for not disclosing a capital gains tax liability.
- Käärmann received a 30% discount for his early cooperation, even though the FCA called his acts “careless.”
- Wise declared that Käärmann was cleared by the FCA and could continue to serve as CEO.
Wise CEO Kristo Käärmann was fined £350,000 by UK regulators for his personal tax disclosures, although he was nonetheless permitted to remain in his role.
On October 27, the Financial Conduct Authority (FCA) said that Käärmann had been penalized by HMRC for failing to disclose a £720,495 capital gains tax requirement following the sale of $10 million worth of shares in 2017 without indicating whether the shares were from Wise or another firm.
Due to his travel schedule, HMRC fined him £365,651 for failing to open two letters on the liability. Despite paying the penalties in February 2021, he failed to notify the FCA of the tax verdict.
Additionally, Käärmann neglected to inform the FCA that he and a number of fast-food restaurants were listed on HMRC’s public “Name and Shame” list in September 2017. When Käärmann’s name was added to the list of tax defaulters in 2021, a journalist contacted the regulator to inquire about the HMRC penalties.
FCA Demands Excellence While Käärmann Gets a Break
Joint executive director of enforcement and monitoring at the FCA, Therese Chambers, said, “We expect high standards from leaders of financial firms, including transparency and openness.”
Käärmann would have been fined £500,000, but the FCA found his acts “careless, as opposed to deliberate or reckless,” adding that he received a 30% reduction for his early cooperation.
Wise affirmed that the CEO can carry on with his position after the FCA and Käärmann concluded the probe.
In order to facilitate quicker and less expensive cross-border transfers, primarily between the UK and Estonia, Käärmann and Taavet Hinrikus co-founded Wise in 2011. The business, then known as TransferWise, rose to prominence in the London IT sector rather fast. Wise was valued at £7.5 billion when it was listed on the London Stock Exchange in July 2021, making its co-founders billionaires. The Sunday Times estimated Käärmann’s net worth at £1.7 billion this year, mostly due to his 18% ownership in Wise.
Wise is subject to FCA regulation for its electronic currency and share trading services.
